Marks & Spencer Share News (MKS)

LONDON (Alliance News) - UK stock markets ended mixed on Tuesday as investors cautiously await the outcome of the US election and a trio of results published by consumer-focused stocks dominated the movers.

On Monday, London's indices closed higher after Democratic nominee Hillary Clinton was cleared of criminal charges by the Federal Bureau of Investigation over her use of a private email server while acting as secretary of state. FBI Director James Comey had disclosed a further probe involving Clinton just over a week earlier, a move which precipitated a narrowing of the polls in the US election race.

That narrowing raised concerns Republican nominee Donald Trump could win the race and sent shivers through markets last week. But the clearing of Clinton was followed by polls showing her in a slim lead going into election day on Tuesday, news which buoyed investors on Monday.

With those bets made on a Clinton win, investors stood pat on Tuesday awaiting the outcome of the election. "Trading today has been conducted with a nervous eye on the US election, and while anecdotal evidence has peppered the day, investors will just have to be patient for a few more hours," said Chris Beauchamp, chief market analyst at IG.

The FTSE 100 ended up 0.5%, or 36.73 points, at 6,843.63. The FTSE 250 closed down 0.1%, or 9.87 points, at 17,447.79, and the AIM All-Share ended down 0.1%, or 0.40 point, at 801.83.

The BATS UK 100 index rose 0.8% to 11,568.86, the BATS 250 ended down 0.1% at 15,809.30, and the BATS Small Companies closed down 0.3% at 10,678.76.

In Europe, the CAC 40 in Paris ended up 0.4% and the DAX 30 in Frankfurt ended up 0.2%.

On Wall Street at the London close, the Dow 30 and the Nasdaq Composite were both up 0.4%, and the S&P 500 was up 0.3%. Conor Campbell, financial analyst at Spreadex, said US markets are unlikely to do much until the first exit polls for the election "dribble out" later in the day.

Brent oil was trading at USD46.06 per barrel at the London close on Tuesday, up from USD45.55 per barrel at Monday's close. The American Petroleum Institute said on Tuesday that crude oil inventories in the week to November 6 surged by 9.3 million barrels.

Gold was trading at USD1,274.74 per ounce at Tuesday's close, down from USD1,281.50 at the close on Monday. The precious metal had been boosted last week as investors fled to safe haven assets amid the spectre of a possible Trump win, but dipped back on Monday and was falling further as London equities closed on Tuesday.

John Higgins, chief markets economist at Capital Economics, said a win for Clinton is now "heavily discounted" by markets, though equities would likely still get a boost if she does make it to the White House. Trump winning, however, could result in a big fall in equities and in the value of the dollar, he said.

At the London close, the pound traded the dollar at USD1.2399, broadly flat against USD1.2407 at the close on Monday, while the euro was trading at USD1.1047, from USD1.1038 at Monday's close.

In corporate news in London, Associated British Foods topped the FTSE 100 throughout the day and closed up 6.4%. While the group reiterated that UK margins for its Primark discount fashion business will be squeezed in its current financial year, investors instead chose to focus on the improving picture for its British Sugar business.

Michael van Dulken, head of research at Accendo Markets, suggested that lower financing costs and helpful foreign exchange moves are helping sugar margins for AB Foods, bringing focus back to its ingredients and agriculture segment to prove that the company's story "can still be something other than discount fashion and Primark".

AB Foods reported a pretax profit of GBP1.04 billion for the 53 weeks to September 17, up from GBP707 million the prior year, as revenue rose to GBP13.40 billion from GBP12.80 billion. Adjusted operating profit, which strips out amortisation, profits or losses on the sale of non-current assets and exceptional items, rose 3% to GBP1.12 billion.

At the other end of the blue-chip index, retailer Marks & Spencer Group closed down 5.4%, while tobacco giant Imperial Brands closed down 2.7%, the two worst performers in the index.

Marks & Spencer, the clothing, homewares and food retailer, tabled the second phase of its huge restructuring plans, comprising a rejig of its stores to focus on its strong food business and a decision to withdraw from direct-owned stores overseas in favour of a franchise model.

As those plans to return the group to health were outlined, M&S also reported the first phase of its restructuring programme had hammered interim pretax profit, said Clothing & Home sales had continued to decline, and said it would not be making any further cash returns to shareholders in the second half.

Liberum analyst Tom Gadsby was not convinced by part two of M&S's restructuring. "We wanted to see radical action from M&S and we rate the the strategic review, part II as 'medium' radical," he said.

Imperial Brands, meanwhile, said it will continue its strategy of slimming down its cigarette portfolio and spending money on its growth brands in coming years, while continuing to cut costs in the business and maintaining its dividend payout growth at 10%.

The plans were tabled as Imperial reported one-off costs dragged on its pretax profit in the year to the end of September, but underlying profit grew thanks to a boost from the weak pound and a robust performance from its Growth brand portfolio.

But the new investment plans and further cost cutting effort will mean Imperial's constant currency earnings per share growth in 2017 will be at the lower end of its 4.0% to 8.0% guidance range, before then improving towards the top end of that range in 2017.

In the FTSE 250, sports clothing and equipment retailer Sports Direct International ended down 3.5% amid a further war of words with the UK government's Business, Innovation and Skills Committee. A Sky News report on Monday said MPs had accused Sports Direct of placing a recording device in the room at the firm's Shirebrook warehouse where a meeting between committee members had taken place.

Sports Direct denied the accusation on Tuesday and noted it was "disappointed" the MPs chose to visit when founder Mike Ashley was not at the Shirebrook site.

Insurance and employee benefits provider Jardine Lloyd Thompson Group finished down 4.0%, after it said it plans to continue its investment spending in the second half of the year despite difficult trading conditions. "The trading environment is anticipated to remain challenging for the remainder of the year," the company said.

The economic calendar on Wednesday, which will be overshadowed by the US election results, will include consumer and producer price indices from China at 0130 GMT. In the UK, the Royal Institute of Chartered Surveyors' house price balance numbers will come at 0001 GMT, with trade deficit figures at 0930 GMT. In the US, MBA mortgage applications are due at 1200 GMT, with Energy Information Administration crude oil stocks following at 1500 GMT.

In the UK corporate calendar, grocer J Sainsbury, energy provider SSE, information services firm Experian, and luxury fashion retailer Burberry Group publish half-year results. Flexible office space provider Workspace Group and cyber security firm Sophos Group publish half-year results, while housebuilder Redrow, insurer esure Group, specialty chemicals firm Synthomer, and oil and gas explorer Tullow Oil publish trading updates.

By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance

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